🏦 Insurance vs innovation

A crisis in a mid-sized bank is prompting calls for changes to Brazil's deposit insurance system, pitting large financial corporations against fintech upstarts

The crisis of a private bank could cause setbacks in Brazil's fintech market

Many see BRB’s Master deal as a state-led intervention, albeit a quiet one. Photo: Master

Many see BRB’s Master deal as a state-led intervention, albeit a quiet one. Photo: Master

The financial troubles of a mid-sized bank have prompted Brazil’s largest financial institutions to call for changes to the country’s deposit insurance system, exposing long-simmering tensions between traditional banks and fintech upstarts.

Early in April, Banco de Brasília (BRB), a state-owned lender tied to the local government in the capital, announced plans to acquire a stake in Banco Master, a private institution teetering on the edge of a funding crisis. The proposed rescue (a 10-figure deal) surprised markets and drew close scrutiny from the Central Bank, which has up to a year to analyze the operation.

Many in the market see the deal as a de facto bailout, intended to prevent broader financial contagion. Both institutions deny this — but the deal is facing legal challenges.

The case has reignited debates over the role of Brazil’s deposit insurance fund (known as Credit Guarantee Fund, or FGC), a privately managed deposit insurance scheme that has become central to the business models of many smaller banks and fintechs.

💼 Brazil Business

Your guide to the largest economy in Latin America, from finance to innovation.

Already a paying subscriber? Sign In.

This subscription also gets you:

  • • 🌞 Brazil Daily
  • • 🌎 Latam Report
  • • 🚜 Brazil Agro
  • • 🌳 Brazil Climate
  • • 💬 Brazil Society
  • • ⚽ Brazil Sports

Reply

or to participate.